Do I Need a New GST Number After Buying a Business in Alberta?

You have bought, or are about to buy, a business in Alberta. One of the first practical questions is whether the business keeps its existing GST number or whether you need your own. The answer is not the same for every deal.

How the purchase is structured matters, and so does whether you are already registered for GST. This article explains the rules that apply to GST on a business sale and the points to confirm with the Canada Revenue Agency (CRA), your accountant or a lawyer.

This article covers the law of Alberta.

Asset purchase or share purchase: why it matters

In an asset purchase, you buy the business property itself, such as equipment, inventory and goodwill. The seller stays the same legal person and you become the new owner of what you bought. In a share purchase, you buy the shares of the company that runs the business. The company stays the same legal entity, and only its owners change.

That difference matters for GST. After an asset purchase, you are a different person from the seller, so you need to look at your own GST position. After a share purchase, how GST registration is affected depends on the details of your deal, so it is worth confirming with an accountant.

Because the details depend on the structure of your deal and on your own registration status, confirm with the CRA or an accountant before you assume an existing number carries over or that you must open a new one.

How GST applies when you buy business assets

Without an election, each property and service in a business sale is treated as a separate supply, with a part of the price allocated to it. GST, at 5% in Alberta, can then apply to the taxable parts. Alberta has no provincial sales tax, so GST is the only sales tax on the deal.

There is a special rule for sales of a business or part of one. It applies where the buyer gets all or substantially all of the property that can reasonably be regarded as necessary to carry on that business. This is often called the going-concern rule, and it is found in section 167 of the Excise Tax Act.

The section 167 election and your registration status

The going-concern exemption works through a joint election by the seller and the buyer, made in the prescribed form with the prescribed information. If the election is valid, no tax is payable on the supplies under the agreement. The CRA form is GST44, titled GST/HST Election Concerning the Acquisition of a Business or Part of a Business.

Your registration status is central here. The election is not available where the seller is a registrant and the buyer is not a registrant.

Even with a valid election, tax can still be payable on a taxable service the seller will render, on a taxable lease, licence or similar supply of property, and, where the buyer is not a registrant, on a taxable sale of real property.

How the sale affects your filing

If you are a registrant buying under the election, you must file it with the Minister by the filing deadline for your first reporting period in which tax would otherwise have become payable on the supply. The Minister may accept a later date if you apply. Put the date in your calendar when the deal closes, and confirm the deadline with the CRA or your accountant.

There is also a rule for deaths. No tax is payable when an estate transfers a deceased person's business property to a beneficiary who is a registrant, if the property was used in the deceased's business immediately before death, the transfer follows the will or succession laws, the beneficiary takes it for commercial activities, and the estate and beneficiary jointly elect.

Reporting periods, return due dates and how a new account is opened are set by the CRA. Ask the CRA or your accountant to confirm them for your situation.

What to do next

• Confirm in the purchase agreement whether you are buying assets or shares.
• Find out whether you and the seller are each GST registrants.
• Ask your lawyer or accountant whether the business qualifies for the section 167 election and whether GST should be addressed in the agreement.
• If an election applies, complete form GST44 with the seller and confirm the filing deadline.
• Check how the price is allocated, since taxable parts can carry GST without an election.
• Confirm with the CRA whether you need a new account or can continue with an existing one.
• Search the Alberta Corporate Registry through a registry agent to confirm the corporation's details, such as owners, directors and legal addresses.

Deal timing matters, so raise GST early, before closing, rather than after.

Frequently asked questions